Beacon Roofing Supply, Inc. (BECN – Free Report) inked a deal with a leading renewable energy developer, service supplier and systems provider — BayWa r.e. — for the sale of its Solar Products business. Beacon sold Solar Products to improve financial flexibility and focus on its core exteriors business.
The solar products business was part of the Allied Building Products acquisition, held in 2018. In fiscal 2021, the divested business generated net sales of approximately $111 million, net income of $2.6 million and adjusted EBITDA of $3.7 million.
With this divestiture, the company is committed to growing sales and profitability as well as pursuing strategic growth initiatives for its core exteriors business. The divestment will help Beacon return to its legacy position as a focused leader with exterior building products distribution. Notably, 80-85% of the company’s continuing business will be within residential and commercial roofing. Driven by the high concentration on non-discretionary repair and remodel demand, exteriors offer a unique platform for the company.
Beacon’s president and chief executive officer, Julian Francis, stated, “BayWa r.e. is one of the most respected brands in the clean energy business and uniquely situated to provide the best service for our solar customers and the best opportunities for Beacon Solar employees. We also look forward to developing cross-marketing and selling opportunities with BayWa r.e. to mutually benefit both companies in their respective markets.”
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Beacon Roofing’s shares have underperformed the industry in the past year. Nonetheless, earnings estimates for the current year have been trending upward in the past seven days, depicting analysts’ optimism over the company’s growth prospect.
Recently, the company’s board decided to change its fiscal year end from Sep 30 to Dec 31 (effective from Jan 1, 2022) for the year ending Dec 31, 2022. It feels that the change will be extremely beneficial by promoting internal efficiencies and better external comparability.
Beacon Roofing currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Builders FirstSource’s shares have gained 72.1% year to date. Earnings are expected to rise 173.1% in 2021.
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