Beacon Roofing Supply, Inc.. BECN recently announced the sale of its Interior Products business to improve the company’s financial flexibility and focus on its core business, exterior. Beacon sold Interior Products to Foundation Building Materials, which is majority-owned by units of American Securities LLC, a leading US private equity firm. The transaction is valued at $ 850 million and is subject to some adjustments.
With this divestment, the company aims to increase sales and profitability and pursue strategic growth initiatives for its core outdoor business. The divestment will help Beacon return to its previous position as a focused leader in the distribution of outdoor construction products. In particular, 80-85% of the company’s continued business will be in residential and commercial rooftops. Due to the high concentration on non-discretionary repair and renovation requirements, outdoor areas offer a unique platform for the company.
Beacon plans to use the expected after-tax proceeds of $ 750 million from this sale to reduce net debt and strengthen its balance sheet.
Julian Francis, President and Chief Executive Officer of Beacon, stated, “ The completion of the interior decoration product sale represents a transformational event for our company as we focus on growing our core outdoor business and the proceeds from the sale significantly increase our financial flexibility improved. ‘
Share price development
Beacon Roofing’s stocks have outperformed the industry over the past six months. Earnings estimates for the current year have risen over the past 30 days, showing analysts’ optimism about the company’s growth prospects.
The company recently delivered strong results for the first quarter of fiscal 2021. The end result exceeded the Zacks consensus estimate, which was largely based on a solid residential environment, stronger gross margins, and lower operating costs. The increased focus on the e-commerce platform, the new OTC delivery network (On-Time and Complete) and a redesigned website are further positive aspects.
For the 2021 financial year, the company expects sales growth in the continuing operations in the high single-digit range. Adjusted EBITDA for continuing operations is forecast in the range of $ 500 million to $ 525 million. This improvement reflects strong sales growth, gross margin gains, and favorable operational leverage.
The story goes on
Beacon Roofing – that shares space Builders FirstSource, Inc.. BLDR, Fastenal Company Fast and Lowe’s Companies, Inc.. LOW in Zacks Building Products – Retail – currently has a Zacks Rank 3 (Hold). You can see The full list of today’s Zacks # 1 Rank (Strong Buy) stocks can be found here.
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