Truist Securities Analyst Keith Hughes reiterated a hold rating. Beacon Roofing Supply, Inc. BECN with a target price of $85.
The company recently released its preliminary second-quarter results and said it expects net sales of about $2.5 billion and gross margin of about 25.4%. BECN expects net income of $147-$154 million and earnings per share of $1.88-$1.97.
The analyst believes a lesser downturn in housing construction and recent storm activity contributed to the results.
After updating preliminary results, the analyst increased FY23 EBITDA estimate to $856 million from $846 million and increased FY24 EBITDA estimate to $892 million from $888 million. Dollar.
Management expects FY23 EBITDA to be between $840 million and $870 million (route price: $839 million).
This is the upper half of the company’s original guidance range for the year, taking into account its current view of current macroeconomic conditions.
The Company plans to repurchase outstanding shares of 400,000 CD&R Series A Preferred Stock for $804.5 million (plus total accrued and unpaid dividends as of the repurchase date). The transaction is expected to close by August 11, 2023.
The buyback is expected to increase debt by 2.9 times, which the analyst believes will be reduced by stronger debt repayments as management does not expect further buyback activity in 2023, the analyst notes.
The value-added buyback will reduce the diluted share count by 9.69 million shares. In addition, the company will forego preferred dividends of $24 million per year.
The analyst believes this will significantly simplify the company’s capital structure in terms of estimating diluted shares outstanding.
price action: BECN shares are trading up 1.66% to $83.95 at last check on Monday.
www.benzinga.com
https://www.benzinga.com/analyst-ratings/analyst-color/23/07/33171784/storm-activity-boosts-beacon-roofing-supplys-preliminary-results-analyst
