Beacon Roofing Supply (BECN) 4 May 232023 Q1 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Beacon First Quarter 2023 Earnings Call. My name is Bethany, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the call over to Mr. Binit Sanghvi, Vice President, Capital Markets and Treasurer. Mr. proceed, Please Sanghvi.

Chief afternoon, posted time Good questions. open Julian thank for of follow After Lonegro, you Beacon's prepared website. begin Hey, that Beacon's the remarks join everybody, call Investor us the the will our Frank and to Executive slide today. we'll Officer, on taking for will Chief with deck Bethany. the Officer; and Financial to our that, Francis, section call Relations

X for Slide couple we of reference Before begin, reminders. a brief please

will this company's First, statements plans and contain call forward-looking about objectives performance. the and future

forward-looking can do estimate, results historical the to identified of believe statements Forward-looking and such may words be words because Actual expect, not relate use meaning. facts current they and strictly anticipate, as other or the similar indicated as in XX-K. important XXXX such to, materially various of not of those forth those including, set result section company's differ factors, Factors from a but the Form Risk limited statements by

statements no call And except in forward-looking revise XXXX. by the law, statements. Second, this required forward-looking to X, on undertakes update these company are information of any or May as the contained obligation as today, of based

this on non-GAAP are certain Both comparable in presentation And will call at contain of references call. the release and the the GAAP press today's press website and available the to measures. finally, accompanying The to becn.com. reconciliation to those presentation measures is this forth release measures most non-GAAP our set appendix the

Julian. remarks Now let's begin with from opening

Thanks, Binit. afternoon, Good everyone.

cash with approximately were contracted prior expected. in acquisitions, This, to volumes. markets than lower strong year-over-year, important one single during exposed a first construction resilience compared the expectations new to with exposure quarter country nonresidential during quarter. Residential remember Hurricane construction quarter given year than remained particular, more In from Florida that areas year-over-year. Texas, the Daily with lower increased during we Storm of single-family and the the as to such And comparable well-publicized the destocking associated quarter. new XX% The volumes volumes to to offset flow. well And weak down sales and growth higher environment an showed delivering decline. executed and weather in were to slightly come combined in repair sales record residential largest our initial team it's rebuilding X% the Let's Slide sales prices of digits contributed the start Ian. up the the end selling quarter. replacement reroofing demand Nondiscretionary the Average X. begin showed markets our on high due uncertain from from net year, as activity. markets

end had As We destocking believe continued lead continue demand. in supply nonresidential opposed expected, majority chains we to the as market were a of as times decline level roofing we a on contractor Commercial ease, to at no and down. seeing of largely products. volumes result are the

Coastal Our business November acquisition complementary the year. in benefited last of of Construction products Products from

in Growth a the Beacon. sales waterproofing and higher complementary siding of our opportunity division, with new pleased are also growth We the it performance represents significant to products contributed our for year-over-year.

history. the our reflected recorded quarter second in we highest margin environment, price Gross and EBITDA adjusted profit we mostly roll-off that stable inventory in first expected

net generated last debt towards We invest initiatives value-creating to cash at also in began delivered strong while which third maintaining flow as of end low our the first used to our in Ambition we year. quarter inventory, XXXX quarter our We leverage the the cash we of target continue flow targets rightsize achieving quarter range. in

seven adding employees branches, and welcome customer Systems Beacon to a of quarter, Exteriors, During Coastal first Al's their team. total the reach. acquired the Supply, we our Building expanding Prince Roofing We

branches new quickly box also adding five have to customers. out our of the service We come year and this enhancing greenfields, on

Our fourth our quarter share under call. conference buyback $XXX continued on expanded announced the authorization million program

as our have the demand end we outlined market on In call of in fundamentals summary, performed February.

met would the As the about by environment, And a stability. residential half team the construction. reminder, said what would new and we single in XX-year be to mid the down has be the first and market but storm the markets weaker residential contracted executed our price quarter, tailwind be volumes led demand average digits, in flat, a high to be our has In expected the destocking. a market by we first was said affected We a broadly overall demand well. expectations, will despite would return nonresidential on

brief to where the Page Now initiatives. strategic our please X update deck of a turn on I'll provide

winning First, the highlight a let me building our than and more team ways nothing culture. are that important of we health members. safety There's a of couple

for a on we Safety. of the President During passion ] one and to in fundamental critical will we first what his to announced Health Mid-Atlantic running quarter, top we of safety that as field operators area taken safety. experience our Vice of Dan's advance operations Environmental lead tapped focus as [ invaluable our role and Dan role region Walley our and an has extensive do be

is them. recognize making held improving also our our will of caring focus night home employees another employees and everyday and one a and safer. day and X,XXX which We all our paused hazards we top to avoid company-wide branches recommitted annual XXX in for The standard, safety priority, every employees' ability every and safely getting to power on

an experience through that driving achieving initiatives. our growth to industry-leading margins goals. market last a our targeted central will enhancing also of set We're Many of you and is year from Day customer recall above delivering Investor

them, detailed shared across is that to feedback on use have our our proposition. we value a replicate to that Based actionable what are this differentiate and we markets. most important able feedback, created customers plan Our we to and

network are to from identify leveraging customers and improve with are teams quickly we feedback mindset. of OTC to a issues and multiple continuous we and customers, We investing opportunities, employees contact, our in we resolving wins and customer points our our are building driving accountable service, improvement effectively for are seeking

solve Engaging markets it with and and our our most customers advantages basis last of have is needs have launched beginning important Since the six strategic during and need first year, best the markets to these pressing to practices the our an rolled most they eight when during quarter. success. we for the moments where out the leveraging in additional

better We Customers are and wallet on-time want sales on are tangible uniquely experience, us in we and positioned customer they that to have confirmations, improvements photo growth seeing delivery, share. a drop deliver told need.

acquisitions. growth lever our Expanding also our in plans, greenfields investments includes reach customer major in a which and is tuck-in

a XXXX. pipeline. We executing greenfields five on a our dedicated customer added least solid service, adding efficiency to and year-to-date, of improving XX is Our robust in goal greenfield locations at enhancing team start

opened new last beginning We pace XX of have Ambition well branches the on year, to exceed since now goal. XXXX our

seven we expanding Our in completed in the quarter, targets, adding acquired M&A country. the our announcing markets branches. total, And across opportunity since three acquisitions adding eight XXXX have branches Ambition in plan, XX also team our

Our margins showing is designed to grow set of initiatives also results.

generates offline sizes of approximately competitive sales increases Our digital customer gross clear loyalty, delivers basis channels. basket for online our margin compared through capability points is and a to Beacon enhancement and platform larger XXX differentiator

our and We are customers whenever complete offering digital and expand confident to the that to continue they wherever capabilities serve provide most we need.

position. business to leadership committed customers how same our us. do building make technology Plus it are launch upon extending ] an investing to by late At further easier we for of Beacon the app our new to are our The leadership with last year [ we time, is Pro mobile of example

XX% During residential quarter, more of digital an the first we platform. sales achieved of digital the through XX% sales than year-over-year grew and all-time high

And I joined continuous as I've company, since operational we through will said excellence initiatives. improvement the drive

performance. service as the bottom improvements sales The well as of to the the average Our relative generated as threshold And performance branch to higher, the EBITDA improvement our the quintile benchmark focus the and levels so for bottom both contribution has on average moves the company's does is lines. quintile. significant branches at branch

that Line rigor basis the company so-called performance plan this drive approximately points. our discipline, XXXX, branches year for the than by XXX the ], [ the continue the and to will of overall cutoff improvement Through prior performance is selects we higher For higher. Mendoza

is productivity, reliability improve fleet our showing initiatives and addition, to results. In our uptime also

to and tractors. productivity increase emissions. reducing and X of providing average age the have metrics more we the In years, upgraded a fleet years, and reduce driver goals our the XX% the by tractor of X added improving fleet, reducing average age while retention than past have We our efficient benefit more of

of current to utilization tractors branches moving at our assets, We also opportunity. existing optimizing every our are greenfield

create owners Lastly, to of we for to strategic value. our stock. our initiatives shareholder designed are all returns committed our improving And are

of our and repurchases share commitment to demonstrating retired It important to be and shareholder XXX,XXX our balanced the creating During confidence XXXX. allocation, value future. shareholders value The quarter, we to Ambition capital our nearly in an first to part in demonstrate continues confidence delivering both the our commitment shares.

Our to quickly they our has for opportunities allowing real as and to invest adjust allocation a balance sheet in us, capital become to the us maintain strength flexibility arise. priorities

to to expansion margin cycle. and continue We paths have growth the multiple through

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

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

everyone. Thanks, Julian, evening, and good

impact average per of total up as the Slide nearly day more than selling than in net organic a more X. X.X%. quarter, achieved volumes. in We little to acquisitions more sales combined year-over-year a than with lower first up Total on prices were billion sales Turning higher reported the $X.X net X% offset basis

additional the reminder, a XXXX day selling quarter first year. As prior we had in the versus X

precipitation X% sure In especially price the I'm contributed including growth, and of aggregate, more As Coastal per to in to to in were sales X% and contributed the while are winter to swaths than down you daily XX% volumes are during approximately had weather the day Products XX% large we net aware, country March. XX%. organic revenue Construction year-over-year. performing well quarter, Acquisitions,

remains to it while which from toward was before nonresidential continued year, quarter down weighted remains of in backlog, orders and its COVID. quarter the continue in approximately last convert what twice come second the it peak to Our

higher per low in approximately shipments new regions double-digit volume the offset in declines Residential higher roofing construction. exposure were by single-digit X% sales from high day lower lower by as in prices were range to part year-over-year single-family with

to volumes that industry that favorably first comparable. ago. record was of a noted quarters And down, the be we X quarter also a year should prior residential started quarter volumes, It trend while continuing approximately compare our were shingle

that driven shipments sales as year-over-year. the sales waterproofing increased Complementary Coastal our a mind of products was contributed of exposure. of in all in in the customers to XX% complementary roofing prices sales the complementary product year-over-year per lower products by has with nonresidential declined lumber, Strength mid-teens category higher growth. Coastal, prices addition by offset of residential as the now across day higher our X% our partially lines drove the also higher product by XX% XX% day on Nonresidential siding per our selling with basis, destocking Please by as approximately the well as acquisition exception of keep and year-over-year.

X, the as higher guidance XX.X% with Turning first was operating average selling review QX and prices by expense. were to pre-COVID we solidly offset product put margin February Slide gross unfavorable margin higher in by approximately year-over-year. and quarter, levels. XX above Gross the margin in gross line Price/cost points was costs in we'll out basis

and lower broad-based a XXXX, will label offsetting inventory increase nonresidential roll-off significant shingle inflation the January the digital year-over-year recall mix of our period, to across had was Partially in including of led in sales. sales we You year-ago and products private profits. inventory that which higher profits price

adjusted Adjusted primarily $XX compared The approximately accounted or a branches. million XX.X% basis year-over-year an driven OpEx of increase. $XX percentage the to acquired year-over-year sales Together, was increase points branches the these and year-ago as by for was XXX OpEx $XXX year-over-year. quarter. to million expenses in with associated increased OpEx of change million, of greenfield

and insurance, resetting accruals as incentive benefits, compensation wages, the as offset real travel of and well to pressures, and XXXX by variable increases These the increase. rents, utilities lease-related Inflationary estate entertainment our the also fleet, targets. taxes, contributed maintenance costs to partially fuel were

seasonal the are the to while provide chart we of activity properly branch that pattern, focus the our we seeing a are in the confident construction customers staffed typical and the productivity on service reflects ramp remains And we level high Our meet expect. in are priority. QX

business. Our impact our to and remains conditions higher to rates of of changing respond on ready team market is interest the watchful

and At margin on focused investing to part the of in growth drive through initiatives the same time, as are XXXX. above-market we cycle enhancement Ambition

approximately the projects continued Our in to investments operating $X during dedicated experience tools, related investments million sales quarter. expense M&A including organization, optimization branch first growth, future in greenfield and e-commerce within and teams, line XXXX initiative, our totaled Ambition pricing the quarter. customer the

support a X. with inventory with the record rightsizing million Operating flow costs million, our lower a was we worth flow approximately adjusted started by product quarters, basis, testament higher to inventory continued On inventory initiative Slide over mid for first cash as new the quarter and branches. $XXX have first noting million that our we a year-over-year, was $XXX inventory we net how also acquired greenfield operating $XXX last been cash year-over-year to to It at true through in hard is Turning generated the X year. last team quarter even working. has M&A

Investor Our consistent out capital laid remains approach Day. at with allocation we what

only M&A, and invest in customers and well and cash our facilities our returns. We growth will balance between but of upgrading greenfield capacity, not inorganic to also fleet employees. positioned and we sheet opportunities With and shareholder to are manner ample deploy the in a balanced support organic

We for future lay and productivity. the process and branch will the service, that improved in investing technologies are also growth groundwork

our resulted XX through XX.X last a in approximately versus issuances we our at share in the liquidity for the Net same Xx than billion. was range Day. at to retirement leverage at quarter compensation, end were plan Net Xx and of repurchases And stands Investor common available XX.X outlined of of million made Rule debt more time XXbX-X reduced year. first end the at the the XXX,XXX Share March shares. to at the low $X.X first at stock-based outstanding million quarter shares of the

to approximately announced year. $XXX refreshed million we buyback continue remaining the on authority in February $XXX recently of We have this million

capacity to conditions to and year. We market have our successfully confident as develop throughout ample invest remain changing and ability the opportunities capture they in

With call his remarks. that, to I'll turn for the closing back Julian

turn Please of Page to slide XX Frank. materials. Thanks, the

of Q&A, to on I'd update expectations XXXX. for head our remainder we to Before you like the

remain expect demand to market lower the than overall continue We albeit to years. X healthy, last

will construction than the has reroofing residential quarter. Residential in new to XX-year volume be part by supported be the end but better but reroofing be improved down significantly, down, expect cycle. first levels, We through markets the will overall total sentiment prepandemic

a storm the of storm now in our in higher assumption all return we confidence average the have activity Given demand. to QX, XX-year

We the see continue markets to flat. nonres about

However, will volumes anticipated. contracted was be destocking, year-on-year our down originally as which more than

of XX% approximately of comparable X%, the than we and quarter, year-over-year X% sales month we a X% total ago. slightly X% to the XX% and expect mind to net sales For record Keep given year XXXX growth the growth, to be better respectively. reported second April that and the pacing in quarter second XXXX,

We recently manufacturer's to month effective announcement. announced this a the shingle corresponding price later increase

expectation conditions. and as with discipline we reflect have is realization rigor Our execute expect and will past, we market team our local same the in the to that

which relative the We expect range, in year mid- be prior recall gross record XX% to to inventory quarter, is margins down which high you profits. significant the to had will

remain expectations year full Our unchanged.

This the range growth net expect previously sales acquisitions of includes in X% announced. from continue to contributions We to X%.

by between and roll and inventory Adjusted basis, improvement digital year-over-year Regarding off partially a $XXX the sales. private million XXXX. we offset full higher on $XXX including year initiatives, label our gross expect million expectations EBITDA margin, remain for profit

customers' our products they is needs when Meeting need where and our priority. and our services

initiatives We conversion with cash needs management will compared to to XXXX. and those disciplined other capital working drive higher balance inventory

on pricing productivity be control, efficiency. safety, and the to areas including Our and continue delivering on focus service operational improvements, excellence, will our execution within daily

to their robust locations and our capital and of expect improve target as our as We on in pipeline including our at on continue well delivering least of result XX accelerated will will executing initiatives customers quality that investing branches employees. greenfield deploy for to on acquisitions in growth, we our our

our our results We're operations, investing today organization We continue committed for to the shareholders generating to enhance improve but and shares. repurchase remain delivering to growth tomorrow. will building to our returns

all In positioned value this the for summary, creating are complex our well outperform in we stakeholders. environment, to demand market

helping build the to as of a construction we enter forward looking season. and are of our the part We XXXX key rest more customers

I'd And lines the like to for that, questions. with Bethany, open

Group. Thompson line Thompson the Kathryn question [Operator Research with first from Instructions] Our of comes

the In heavy your earnings some in based -- material residential, saw we wide Lake other still terms impacts on releases, and then local acknowledge prepared price in today May commentary, and -- would color how a you? Salt with markets your producer that Houston realization what shingle market resi markets, on -- more variability trends market conditions you're by side. lingering. like that and City you like you Could that be give on And of recovering terms market with of seeing resi

that more, in Beacon's mega are you pervasive the on Samsung is in projects? projects mega of What sort really like the role companies with side, work how then for projects? these And And type of these market? are the can nonres

lot Kathryn. Thank of the -- question. a in Obviously, to you, unpack

on the So start and market let me the residential side by market.

our our we've were we in years as of couple conditions call of markets. think -- than when said seen year last pretty certainly I the and communications, all the a very year prior this different across it's in the common market

this seen have my and highlighted we differences remarks. So year, far I them so prepared in

has obviously that had in that fell, seeing we Obviously, weather across but the been up. given quite we was the been all seen that strongly, fell, Florida to expect the the recover that country. rain are would start We've first weather down. to weak Texas the return. quarter, certainly that -- they California has of significant snow

California strong. to see to be expect would we So

recover. we're the We in has that on going sentiment some weather construction significant I And to new Texas think saw Texas. activity improved. what is see residential -- the I mean

seen as as we've the from hit year. -- market. recently an -- Florida obviously expect weather I So last Ian activity as more both saw well Hurricane well, that be to as improving We by

Midwest the see of the the some carryover some Upper from storms in there We expect last year. that happened markets and to

decent there's shingles speaking, lot the broadly where going that of we're to areas the So are I a in think of markets see country larger moving.

to And it's so okay. think broadly, be going I

There generally we're are they're of a continued smaller couple markets. seeing markets weakness, but where

remain confident so across year. And has the country on we beginning the of the environment residential since the demand overall that the improved side probably

To The question some with mega of works We business. the in on we to national -- was of think of sort have with projects. address on commercial. a contractor customers our I account what directly your do market commercial And developers. side a group the large certainly going role that play the

What the more we're COVID probably and was large a years the in there which the that focus on and commercial we and less chain construction greater focused. couple projects, supply manufacturers a that's obviously, issues is probably and and from activity focus shift the repair market. over on new was developers seeing both there'll of be delayed the around last the much contractors and because during the the and repair projects was There away replace, were where completing think replace

like a get said, That's we there's probably will see more of us a smaller replace. -- and see executed. We a projects for to, repair the I great more that be. return We place to that's think lot

remain So optimistic. we fairly

start anticipated probably were do that the holding at market new and during the sort bit we But construction overall we than away from our a year-over-year, for maintained the that little of year we've bit about we quarter. flat contractors think commercial to have inventory a of residential. said, mix to seen had we shift little a be of deplete As first the the forecast more

So was helpful. somewhat hopefully, insight that

helpful. super that's Yes,

of RBC. from Our next question comes line Dahl with the Mike

do of across demand? obviously, to inventory specifically, you of out kind in in sales side, day on restock storm sales per Have split at resi tying periods Where started all terms you resi and still Are given residential April stand you today? where total. there's a the some the And been in disclosed you kind you distribution. few into stood of inventory management shingle of the destock day? just Could destocking? that, On of per

Yes.

So Frank. Mike, it's

on XXs volume. volume on on piece dollars year-over-year of significantly something the inventory about basis side, minute, teens, Think low On on the down in high for forget percent side, but about were volume we the shingles. the a a kind

softer you're talked that some quarter. markets. end a in about the storm that When to add those we're you things, to shape on going Julian continue when to about the there. start of inventory some At us And obviously, some build are to markets see going markets, we where in same the in think the markets sequential have about, example, we think recovering time, product you as basis, did likely of an on

probably And then in destocking, on the well. contract to stocked the be as little we a quarter us piece, nonres again, the allow at will that second look bit as

on huge expect will changes inventory geographic see of line So in I the moves business and some aggregate, you some wouldn't but changes.

you about per of effectively up fractionally day, Shingles April, sort price, break were overall, sales terms we volumes. low the were, yes, your it In up give a on singles of flat, question, did When we X% down, and on just you down. down X.X%.

the side the complementary volumes were mention. overall, the destocking of resi in contract So because of heard you continued commercial down the favorable that mid-teens. The were Julian and

you're the of comp exposed the -- piece, mid-single seeing which digits. quite addition and in So was do was down But overall, resi commercial largely with residentially the price, the well. is

year's Mike, very, a emphasize, that last very was strong month. I'd And April

us. So an that for April, residential relatively on it positive flat in to number extremely shingles type sign see of was I'd say

Yes.

For sure.

the comes with [ question from next Our of Mario Associates. Mora ] and line Zelman

are? how over a X I storms into how we've you had insight are any last contribute storms these -- was going have meaningful months. just do there to they to Is the much wondering, demand, few large

that. to happy still it's early. I'd Yes, touch Obviously, be on

storm tailwind below a and was because time, demand, assumption, storm planning the saying the expected base that tend our sort XX-year year we a this always well is average. average it. That we into XX-year to we'll But over see things of build year which that. year's these came to return think, us to last we on we and demand, represented it So the

as inundated the Texas a storms, first of lead We've inevitably the California We've that the it some remember, we've California say storm some in months rain season more active would year. seen through as and through, I seen Florida, Midwest. some certainly seen we've very the few seen and the recently. to then everyone snowstorms, demand. the will additional hopefully I said, And will that that --

are while we've have year today, view and upside think going than that to today, probably a an be to, as months least very X of lead seen we that to at go with we the first the So we're don't we storm average. through biased the to storms complete average XX-year that year, that do relative confident of would few to rather the the months downside of sort

we're has But the Mario when up here that. hail big quarters first is what lower the data, that a specifically quarter, a fourth Again, just third quarters when quarter much at over first the quarter. there's nicely quarters. look and look and X-year see curve the where claims we third in are quarter, claims you'd than the which of the second is mean, the second ], so you the to happen the the first I are at for there average and really insurance the meaningful and bit bell [ insurance your

put point, more assumption feel we've planning planning we're in to There's planning risk storms in in some We the I progress confident to is now early that going you Julian's obviously as But into we your through confident help did the seen always every assumption us that more in which see think guide, we but assumption. storms. second. some April,

the size quantify Or then maybe have way helpful. to could Okay. And it's any you commercial, of getting do That sense do think very you then to to we was long out? end on a of by play the of how take going are destocking you the And contractors? the that?

we QX half. and called contractor destocking, through mean the last would I Yes. we in the it thought call, first

issue. telegraphing of good issue our and the So we recognition our feel the about of

understated in it terms internal ended about relative you happened think percentage If X, of first X, to little side contractor where a were X on were on much specifically. quarter where our in points up, targets the destocking how bit probably in we we the nonres maybe

that month month. We ISO than the internally have through do back destocking see would of that the the month things of do second the same. We finishing to you literally the we And element the very over going insulation getting of or quarter, look as much market single-ply go then pretty lessening second piece over our see obviously, through end the much and quarter But sell-through where end things. demand. earlier

in now of our you being on size I that seeing vast to of what out, what now during And supply products the dramatically chains call Yes. that in I said commercial was pretty their we that see the times. prepared majority would product normalize. of think chain round just when think hands on that what remarks is and holding lead it. the normal everyone couple that supply think lines I defensive and think disruption years, we're really that And could impacted we last taking I they get the

we as now inventory They that. are contractors. talk us their they are tell to working exactly doing through the People

with call we earnings in first of expect, guidance. call that deplete year, in so would remain And and quarter -- that the our the still said on expect as earnings of last we we half type it we the fourth would to

Our Stephens. with line next Trey of question comes from Grooms the

Trey. This is Noah actually on Merkousko for

So -- I touch on to to wanted pricing. the I want touch

and XQ by May. market. margin for contemplate increase that does -- probably does that sales guidance going any traction the I price guess, the announced on to vary increase? bake in You've I it's know

you of part. you today? markets in worst terms Can second quick your a best and just compare then behavior your any And seeing And competitive markets pricing? are

Frank So of first. part, I'll let the I'll quantification. some with start second into the

that's said, we've and believe So called what seen. we've we we pricing, relatively stable as that for

the If stable of quarter about we've had environment all pricing across happened quarter, you demand broadly last fourth seen markets. year the now in first what and actually and weak think pretty we've a

benign pretty some but of there, activity characterize a it We've would as environment. seen, I obviously, out overall

And is We've pass we think us. where more see really we're things. capture everyone's sure that structure side. these as stability ensure in of been which seen are inflation, passing a rents, on I making just the all in I impacting think the broadly overall, to that mean that's in We've really cost we inflation through. important seen manufacturer those not for price we believe environment are that us it's has the I for that time important inflation it's through. place a wages, hit our it's things mean, an that I Beacon. impacted that can that

you demand overall On some you give situations, landscape, which X quarter have the and and then resi, the we overall -- some I first than talking Yes. quarters the or now, of And of the guess, channel all in for up saw about I on pricing would in X year-over-year. example, the, lower quantification indication demand then destocking for the been inventory holding. of in being mean, prices where out-the-door those are held sequentially, competitive

When that margin let start from second the one. the on for guide quarter, you the just gross look me at top

industry remember certainly plus follow-on year, last the high the magnitude time XXs remember to mid- long seen in range. really year. a those the April So early double-digit And had that the versus XX.X% were the but maybe January, that the increase. of February that from increase a Last you the ever, in hadn't

by points at May XXX then some quarter. from bit we've And just of late will cycling which little this increase help basis the least got of mix profits, we that got you've from again, have market. that inventory quarter help alone. a those So do market And be

to mid-May in notice of got under And we give the that certain terms et have it's contract to, its we've cetera. items announcement, fact

I quarter lot whole the a quarter between blended would quarter and impact third it the than by see rather second the itself. more So second of in

That's Got it. really leave helpful. there. I'll it

next Our the from comes of Philip Jefferies. question Ng line with

another, Maggie Phil. quarter greenfields, can for first you step in on guess about think, for planned the XX up that talk this is we've seen if have year. This and of pace the I I just you

ramped any up? about margin that factors those your as just guide maybe if full getting could talk and you So implications how are into year maybe

give were a would stood greenfield color you you, a little get up us activity and to to a the going. get we I while sort last team of tell bit mean I'll that the it. on little took at Sure. commitment program announced as we year it returning the of to beginning. I

looked the So greenfield to last fact evenly more if excited that these to we're activity we're the going year, our bit the quarter. a little in this the of able year, happened in We're you about number of bulk later at the trigger but spread on a first that pull year. out

up keep see expect that pace quarter. quarter over would to similar We We quarter relatively to pace. a want over

we isn't might might feel see This commitment. you locations more can we can believe we we're couple XX. really now, that on X, Hopefully, get return So is when us. do are then we you important get that. This the down good we're that to long-term a markets investment, that shut make underserved, are see a to is opportunity take to in at that if see we something X. markets the it and opportunity great going the a, done going a in we're going But to we get this to to it where believe we

impact. certainly, of to couple they some up in years, margin. the so terms going first to there. company. greenfields relatively efficiencies in get They the are and Obviously, zero But in sales, are certainly put with It's the dilutive. total it's not the we capital small of ramp dilutive need Overall, a their

to X. to and is as quickly that markets, to On some try do really we've goal day operating average, months. a every to profitability has cycle In hard the breakeven in levels company and able possible. we it to we as them full so of little that XX as been work more Our sooner. to probably as X shorten get on sort about But it's impact think positive the

the next of Our line with Capital. Loop question Garik Shmois from comes

you dynamics and the kind you offset... to a be situation sooner I speak of chain there new some change just that expecting on see the restocking Will of residential any was of wondering underlying on the light storm demand? tight some reroofing supply you could again stronger mentioned side gets in and on the or the in supply on which little the in if side. Are a you the just bit residential of more

Thanks, Sure. Garik.

supply So it's was of of a getting saw really demand, not of and away we think only we're interesting normal pattern couple over what it last I more from because when sort seeing the is years what tight.

You on had sort side. whack mild residential the and this supply of of winters sort of demand out and the just side, very of the typical behavior the side really both

year you've a maybe is think winter. destocking fourth year. fairly normal, normal little A more we've of what bit some start quarter a in the to seen where I got fairly the aggressive last

inventory assets, assuming that manufacturers I'm were had them to committed more able So run to holding Many historically. have inventory. they than of the build

So be over that few some I would of months. to build to able last the them expect inventory

see gets And the fall year typically demand really heaviest quarter quarter play the is where late that's first that where through feels summer, second the early kind about going -- out. a demand lower of up is. We this season it ramping into to how

all wildcard much -- over terms fairly maybe I year X in that, seen this X will been regional this of think in where be than patterns longer even uniform. the demand the it's years, last we've than it's or more

Southeast, in think going to storms for demand, hit see picking Ian I the that So Hurricane up hail instance, you're the Florida. do

going Florida is think I probably be tight. to

other have we'll plants areas. underutilized, I that a see demand into areas we've little areas those country servicing through and maybe think where country bit those seen the of cascade the been the

above I the being supply environment. total see total the So don't environment demand

So million tap sort shingle squares production. I of in anyone's XXX north don't mat going out would think that and shingle XXXX forecast to shipments of

you've able as their available and regional know, a going with balanced think be to are I where what see efficiently. turn going there's assets see we opportunities But storm tightness for capacity, I the environment down some fairly probably to overall is we're significant us. to seen some think tightness regional regional And activity. manufacturers So we'll fairly

exposure follow Garik, I'd and it's exposure, the to the and new versus to the follow where be tight. resi R&R going I'd storms you'll close get pretty

comes Research. line with Our of from the next Truman Wolfe Patterson question

And Julian, some you call with baseball up enjoy the spicing I references.

Question, hope been it's you're year. fan not season. Cardinals rough So I a this a

the volumes the seen been and from competition just to everything, nonres destocking. XQ side? or trying lower stability trying any You all the really especially including down I'm in in OEMs XX% talking XQ, were looks pricing understand the on I'm to year-over-year, channels maybe it with about and side. mentioned of -- volumes you like there on understand, sequential the price you kind have commercial have the moderation

those to dynamics. some of trying So understand

open. haven't Look, distributor would say session standpoint, the Truman, Q&A it has said prepared that that I pricing that wide environment demand no seen in you we also from I'd contractor a either and to we've standpoint, is as sequentially remarks been throughout environment remained seen a call nothing normal. me, in tell competition. relatively our I wouldn't here, pretty suggests standpoint, has it's stable relatively from an I anything a what benign above OEM standpoint. a that

controlled around thoughtful. pretty to very I about the X mean, I We year. pricing. about ago able disciplined we to call on we for feel very it what see we made intend be We to And only months this expected are intend be our very be and look, this. good that control obviously, to

of the line David next comes with from MacGregor Our question Longbow Research.

to strategy that, you OTC the wanted openings a markets targeting existing just But about cannibalization? new you would us. from And your versus manage about resources existing just markets, if networks, how new help that stores. talk I are you about thinking new could standpoint, how targeting ask towards within

OTC the network, are in branches you as know. Our markets

service and there's and ought So for map element a of cannibalization. honestly new do real revenues really the deliveries, belong no to deliveries what just the understand versus branch, existing what We develop to we of branch that's the closer rather better run and from I miles truck we mean a can way to element do from a branch XXX XX things. or lot having it branch. the efficiency further a of than things a customer

or terms into locations in out had geographies environment. was already think Investor is it Day, there. I big pretty aperture now said The the deployed as we then. XX at We've I we wide. It's target XX as mean XX

where create a need where we So local and more be to much leadership and where particular we underpenetrated very that know need penetrated. we're local it's We be, where of want to a of to market-by-market kind cultivation in we market.

So there's we very that go thoughtful a through. exercise

was It's the has I'd tight than lease say a but ability in in today year it X space much still it been the ago. a find to is lot past. some that easier to than years places, it's easier

So about we're being pretty do thoughtful that. we how

belong in $X open forma, branch, new which is a to put we when the transfer may just let's head one that million there's do them branch, sales say, into really we and that that start. the new what that So over pro gives we

cannibalization can our But is and capacity it's sales. white for ultimately not one new the support and look What drive to into do not the customer service between trying inventory the and better and it's they people space market. to trucks with and branches we're so in another

store And the program. the from to just year can expected to speak your this new you OpEx impact

Yes.

in So the of as QX about OpEx $X was if the specifically use million. an quarter greenfield -- you just think example, the let's side so itself, about

greenfields of were cadence high a year-over-year is But be last we The And the the you'll so neighborhood. difficult I accuracy. year. about Obviously, deploy talk in be kind predict year. number that to a going as to the Julian millions you're single-digit the cycle go to year's to heard this on basis, throughout of we if going right think we'll with level mid- in you

Our next of comes Rehaut Michael JPMorgan. from question the line with

if little than want trends break stated bit storm were I just bit being you guys little some anticipated. Doug the I the you market quarter Wardlaw Obviously, demand. for bit wanted a outside first out and that you Mike. of insight saw just could to weather a you little guys heavier? know quarter on a more heavier more within

Yes.

first M&A the a really there were pricing -- daily combination being There volumes digits that's acquisitions really mean high down fairly in -- a small. being X% doubles. down and as line impact resi X saw by were of The side. up business, slides. over wasn't low single any quarter So the if I prepared down little in year-over-year the on I resi quarter the broke the of dailies you

higher some not So a I was discretionary little big R&R story that markets think the you new obviously But were about rates. talk trends there. There's the res. by an bit Julian interest might I And heard what a expected. of we story, largely mean impacted new exactly It story. R&R the get was construction of

we or nonres the X, X% about so down On of daily what destocking. Again, side, had X percentage originally expected given on that X, the the than extent contractor probably basis. was higher points a

not may in called that M&A We destocking. contractor well and magnitude have the either. environment called we think real I all that no

destocking are as to less so second the seeing of that to end the continue but go by volumes a quarter. conclusion months at come the will negative, We be

largely the M&A On the XX% there. story or the and was Whitney the Coastal of side, complementary the because dailies it's so acquisitions. The of bulk there

drag particular the you what the of the lumber really and was that and specifically both was So thing about business we're waterproofing line the future We're That only is drag excited The price. that was seeing did see that at and Siding side. the that Coastal. with cement mean we've quite well. can vinyl created. look the I well lumber on platform as in well up there. LOB nicely the perform quarter fiber in

overall. So hopefully, gives color you some that

call. Yes. themselves. I are to fourth markets We going the go consensus. at quarter And don't we We new forecast off we know look said. prepared to the said, be substantially. our we residential called look, the markets in end mean I'd remarks construction we at -- of

consensus XX% the plus. So off there was probably

reroofing we've said, and reroofing inspections as are residential higher but are it's met. When and as done largely at insurance housing talked are interest turnover we rates requirements markets, well turnover less about to going cause causes margin housing look, nondiscretionary, the the

to expect down little a would we be bit. So that

flat. about commercial be markets said would We

XX-year the the given we feel of pretty called that. As quarter. Frank contract good to And underestimated which said in destocking, we seen now storms of would we we've probably but their we've and sort average, now, that we've first about said times everything multiple return

confident So in sit what articulating overall to as felt pretty now, feel we And and as weather produce been of overall, like made out in company. at a we're first good quarter stand coming we guidance. a think terms we've But April can good hit we destocking. our here, planning was sort what really feelings I of year. said, reiterate impacted probably of about our we on And assumptions, we've where some that really assumptions the that. for weaker pretty order our right we about good by

That concludes the questions.

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

pretty Thank to you, the sales thank for quarter several number good note. highest we've the start in the want We I think Bethany. months the just that last at Well, my feel the over that closing our to We've macro they've really really a I was year I -- think delivered first about as well. is on that second in put it. well. said delivered all, mentioned record the employees a quarter, performing cash positive EBITDA we just first environment. for first the quarter, for record flow company We work the

pretty So about it. good feel we

be we've service. about We lower capital sales. M&A, disciplined paths looking multiple believe, demand demonstrated. as will in have able that, our margin our at to and we paths, acquisitions growth, environment, And to multiple a grow branches to improve were we got deployment, In with And we've expansion. to overall customer reinvesting we our

for you So thank in we're Beacon. your interest We excited. Have evening. wonderful a

rest the I today's conference all of concludes enjoy call. That hope day. you your

lines. your disconnect now may You