Beacon Roofing Supply, Inc. (NASDAQ:BECN) Q3 2022 Earnings Call Transcript

They have slowed down sharply as it comes to this point in the year, and the builders are getting ready to close out their quotas for the year. So, overall, it’s still a constructive market. I think the deceleration you referred to, Keith, is more to do with how strong last fourth quarter was than our view of this fourth quarter.

Frank Lonegro: Yes. Keith, in your model, just remember a couple of things. I think we mentioned it, but just to pull them together for you. We have got Ian this quarter, we had Ida last quarter. Ida came out really strong. We are thinking that Ian is going to take a little bit longer to get going given the extent of the damage, the type of the damaged insurance claim process. Obviously, the Coastal acquisition is helpful. But remember that we are also lapping the Midway acquisition last year. And then the only way we can handicap the weather is go down the middle and assume it’s going to be a normal onset of winter weather in the North and in Canada, and that has obviously a revenue drag on our business. If it turns out that it’s warm through Christmas, then it’s a different equation.

Operator: Thank you. Our next question comes from David MacGregor with Longbow Research. Your line is now open.

David MacGregor: Yes. Good afternoon everyone. My question was on the price cost in the quarter, the negative 60 basis points. And I am wondering if you could just unpack that for us? Just talk me that with the inventory gains, the shift to private label, the digital, there were a lot of pauses and there is obviously a lot of moving parts in there, but that’s why I am hoping you can maybe shed some light on for us, just the puts and takes behind that negative 60 bps.

Frank Lonegro: Yes. The price-cost actually came in better than what we had mentioned to you when we did the Q2 call, so negative 60 bps was better than what we had originally handicapped. When I look at the three lines of business, and remember, we did mention that the ASP, so the average selling price up sequentially. Remember that we are cycling a September shingle increase last year, which had a high realization, more so than the August increase this year. But the storyline on price cost this quarter is not price. The story of this year on price cost is cost. So, the costs are up higher on a year-over-year basis than price is up. And that was prevalent certainly in the residential space, also prevalent but not nearly so in the commercial space and complementary was actually up on price-cost.

Operator: Thank you. Our next question comes from Truman Patterson with Wolfe Research. Your line is now open.

Truman Patterson: Hey. Good evening everyone and thanks for taking my question. Julian, you were discussing some potential M&A into 2023. I am just hoping you can give an update on the M&A pipeline? Is it still relatively robust? Are sellers expecting rational multiples? And then I don’t know if you all have this offhand, but I know Coastal Construction had about $25 million of EBITDA on an annualized basis. Could you remind us how much your acquisitions year-to-date will kind of benefit EBITDA on an annualized basis?