# Beacon Roofing Supply Inc. (BECN) — Financial Analysis

**Exchange:** NASDAQ  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/BECN/thesis · /stocks/BECN/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: BECN
company: Beacon Roofing Supply, Inc.
step: 04
title: Financial Snapshot & Adversarial Sweep
created: 2026-05-28
---

### Step 04 — Financial Snapshot & Adversarial Sweep: Beacon Roofing Supply

#### 1. Financial Quality Assessment

##### Statement Quality
Beacon's financial reporting quality is high for a public company operating in this sector:
- **Audit:** "Big Four" external audit; no material weaknesses or restatements identified [Judgment]
- **Non-GAAP adjustments:** Adj. EBITDA adds back: D&A, SBC, restructuring charges, acquisition-related costs. Adjustments are industry-standard and consistently disclosed [S1]
- **Fiscal year change:** The FY2021 → FY2022 transition from Sept 30 to Dec 31 creates a 15-month "transition period" that must be treated carefully in any time-series analysis [S2]
- **Preferred stock:** Series A preferred stock (CDR Associates) required as-if-converted diluted share count disclosure; repurchased July 2023 for $804.5M [S3]

##### Revenue Recognition
Distributor revenue recognition is straightforward: revenue recognized when title transfers (typically upon delivery). No complex multi-element arrangements. Working capital intensive due to trade accounts receivable and inventory [Judgment].

##### Adjustments Made for Analysis
1. **Fiscal year normalization:** Using calendar FY2022-2024 for primary analysis; FY2020-2021 (Sept 30 fiscal) used as supplement
2. **Preferred dividend exclusion:** Pre-2023 EPS understated on common basis due to preferred dividends; post-2023 EPS comparisons cleaner
3. **Acquisition amortization:** Adj. EBITDA strips out intangible amortization from acquired businesses — approximately $50-75M/year estimated [Judgment]

#### 2. Income Statement Quality

| Metric                | FY2022  | FY2023  | FY2024  | Trend |
|-----------------------|---------|---------|---------|-------|
| Revenue               | $8,424M | $9,119M | $9,763M | ↑     |
| Gross Margin          | 26.5%   | 25.7%   | 25.7%   | → (stable-flat) |
| Operating Margin      | ~7.1%   | 7.8%    | 6.8%    | ↓ (FY2024 step-down) |
| Net Margin            | 5.4%    | 4.8%    | 3.7%    | ↓ (margin compression) |
| Adj. EBITDA Margin    | ~8.5%   | 10.2%   | 9.5%    | → (peaked FY2023) |
| Net Income            | $458M   | $435M   | $362M   | ↓     |

*Key observation: Net income declined despite revenue growth in FY2023-2024. This reflects higher interest expense from debt used for the $804.5M preferred repurchase and acquisition activity, plus the margin headwinds from asphalt deflation. EBITDA was flatter because it excludes interest. [S4]*

#### 3. Balance Sheet Quality

| Item                    | FY2024 ($M)   | Quality Note |
|-------------------------|---------------|--------------|
| Cash & Equivalents      | ~$150M        | Modest; working capital needs are high |
| Accounts Receivable     | Significant   | Contractor credit exposure; seasonally elevated Q2-Q3 |
| Inventory               | Significant   | Seasonal; carry is efficient for a branch model |
| Total Assets            | $6,950M       | Mostly goodwill/intangibles from acquisitions |
| Goodwill + Intangibles  | ~$3,000-3,500M est. | Elevated from Allied Building Products + subsequent M&A |
| Total Debt              | ~$2,660M      | ABL ($150M) + Term loan ($1,260M) + Sr. Notes ($1,250M) |
| Net Debt                | ~$2,510M      | |
| Net Leverage            | ~2.7x EBITDA  | (Q4 2024 est.; Q3 2024 was 3.1x per company) |

*Balance sheet is acquisition-heavy — Allied Building Products (2018, $2.625B) and subsequent M&A created substantial goodwill. No impairments identified in coverage period. [S5]*

#### 4. Cash Flow Quality

| Metric             | FY2022  | FY2023  | FY2024  |
|--------------------|---------|---------|---------|
| Operating CF ($M)  | ~$600   | ~$850+  | ~$450   |
| Capex ($M)         | ~$120   | ~$150   | ~$160   |
| Free Cash Flow ($M)| ~$480   | ~$700+  | ~$293   |
| FCF/Net Income     | ~1.0x   | ~1.6x   | ~0.8x   |

*FY2024 FCF declined significantly (~56% YoY per Alpha Spread). The decline reflects: (1) working capital build from higher receivables in Q4, (2) higher acquisition spending, (3) normalized supplier payment terms post-COVID. The FCF/NI ratio below 1.0x in FY2024 warrants monitoring [S6]. Cash conversion has historically been strong for a distributor.*

#### 5. Adversarial Research Sweep

##### Short Reports & Activist Materials
No short-seller reports identified in the research period (FY2021-2024). A **proxy contest** was initiated by an activist investor in early 2025 (pre-QXO), with a DFAN14A filed that cited:
- Ambition 2025 target misses (gross margin miss of 130bps, EBITDA margin miss of ~150bps) [S7]
- Questions about capital allocation efficiency (preferred stock repurchase at $804.5M)
- Board composition and management accountability
The activist context contributed to QXO approaching the company; the $124.35/share acquisition price eliminated the activist overhang.

##### Litigation & Legal Risks
- No material litigation identified in the research period beyond routine employment/commercial disputes typical of a 586-branch distribution business [Judgment]
- No SEC investigations or regulatory enforcement actions identified [Judgment]
- Standard product liability exposure exists (roofing materials carry quality/defect risk) but no material claims disclosed

##### Accounting Red Flags — None Identified
- No revenue recognition irregularities
- No unexplained receivables growth
- No unusual related-party transactions (CDR's Series A preferred was arm's-length and disclosed)
- Inventory write-downs: Distribution businesses manage inventory conservatively; no unusual write-downs identified
- Going concern: Not applicable (strong cash flow; acquired in Apr 2025)

##### QXO Proxy Contest Context (FY2025 — Post-Coverage Period)
Before the QXO deal, an activist (QXO itself, through its acquisition process) argued BECN was undervalued at prevailing market prices (~$85-90/share). The $124.35/share offer represented a ~35-45% premium, validating the activist view that the company was undervalued by the market. The board ultimately recommended acceptance [S8].

#### 6. Financial Quality Rating
**Overall: B+ (Good, with leverage concern)**
- Revenue and gross profit: A (clean, consistent, confirmed)
- EBITDA quality: A- (standard adjustments, consistent disclosure)
- Balance sheet: B (high leverage ~3x; goodwill-heavy from M&A)
- Cash flow: B (FY2024 FCF weakness warrants monitoring; historically solid)
- Accounting quality: A (no red flags; standard distributor accounting)
- Adversarial: A (no short reports, no SEC actions)

#### Source Index
| Code | Source |
|------|--------|
| [S1] | Beacon Q4 FY2024 earnings release — Adj. EBITDA reconciliation |
| [S2] | SEC filings — fiscal year change disclosure |
| [S3] | SEC 8-K July 2023 — Series A preferred repurchase |
| [S4] | Multiple press releases — net income trend analysis |
| [S5] | Balance sheet data from search aggregators (MarketBeat, Alpha Spread) |
| [S6] | Alpha Spread free cash flow data — BECN FY2024 |
| [S7] | DFAN14A proxy filing (activist) — Ambition 2025 miss analysis |
| [S8] | QXO acquisition press releases — acquisition premium rationale |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/BECN/fundamental

## Navigation

- Overview: /stocks/BECN
- Financials (this page): /stocks/BECN/financials
- Thesis: /stocks/BECN/thesis
- Investment Memo: /stocks/BECN/memo
- Coverage universe: /stocks