Beacon Roofing Supply : 2021 Annual Report

2021

ANNUAL REPORT

OUR MISSION & VALUES

Empowering our customers to build more - for their customers, business, community, and family - through world-class service and innovative solutions.

Beacon was founded on a set of principles that have guided our business practices and philosophy from thee company's early days. Through growth, geographic expansion, and acquisition of building supply brands throughout the U.S. and Canada, we have sustained a values-based culture. Our values continue to be the foundation of being a trusted partner for our customers, employees, suppliers and communities.

Beacon is the largest publicly traded distributor of roofing materials and complementary building products in North America. We have served the building industry for over 90 years. Our customers rely on us for local access to the building products and services they need to operate their businesses and serve their clients.

We differentiate ourselves in the industry by providing our customers with seamless execution, practical innovation, and a hands-on approach that allows us to serve each of our customer's specific needs. We also work closely with our suppliers, who rely on us to position their products advantageously in the market, supporting advances in products and services that ultimately benefit our customers.

Our mission is to empower our customers to build more for their customers, business, community, and family. Our project lifecycle support helps our customers find projects, land the job, do the work, and close it out with guidance that allows them to deliver on project specifications and timelines that are critical to their success. Using an omni-channel approach and our PRO+ digital suite, we elevate our services and drive customer retention as a trusted business partner.

ANNUAL REPORT 2021

100,000+

440+

6,500+

SKUS

BRANCHES

EMPLOYEES

Our Core Values Inspire Principled Performance

These values are fundamental to who we are and how we work. They guide our business decisions, shape our interactions with customers and co-workers, and drive our vision of the future.

1 PUT PEOPLE FIRST		2 MAKE EVERY DAY SAFER
We are dedicated to forging		We have an unwavering commitment to
collaborative relationships that		safety, because a safe team is a
empower people to reach their		healthy, happy and successful team.
maximum potential.

3 DO THE RIGHT THING

Every day, we have a choice to do it the easy way or the right way - we choose to do it the right way every time.

5 NEVER STOP BUILDING

The path from average to exceptional begins with hard work and we wake up motivated to be a little better today than we were yesterday.

4 OWN YOUR DAY

We take pride in a job well done and are always willing to roll up our sleeves and put in the extra effort to overcome obstacles and get results.

Serving 80,000+

satisfied

commercial

and residential

customers

WWW.BECN.COM

DEAR STOCKHOLDERS & FRIENDS

Fiscal year 2021 was a transformational year in our history.

We focused the business portfolio, created significant financial flexibility and assembled a new leadership team.

Our strategic initiatives continued to be the centerpiece that drove progress on commitments to focus on the customer, improve our branch operations, capitalize on our scale and generate stockholder value. Our team worked tirelessly through COVID and supply chain challenges to provide high caliber service and solutions while ensuring the highest standards of health

and safety.

The housing market provided tailwinds for both our repair & replacement and new construction end markets. Residential roofing demand, and the residential exposed areas within complementary products, benefited from these fundamentals. Commercial contractor sentiment improved, and activity started to show a positive trend.

In fiscal 2021, we produced record performance, highlighted by strong net sales, net income and Adjusted EBITDA, with higher revenue across all three of our lines of business. Management's attention on pricing analytics and operational execution at both the corporate and local level showed results in a challenging supply environment. Our continuing operations produced $6.64 billion in net sales and net income margin of 3.3%, and Adjusted EBITDA margins improved from 6.7% in fiscal 2020 to 9.9% in fiscal 2021, an impressive performance given the environment.

Our growth and transformation have allowed us to attract exceptional new talent to our leadership team. These individuals bring skills that will drive our organization's performance to the next level and attract a new generation of Beacon employees.

The divestiture of the interior products business returned us to being a focused leader within exterior building products distribution. Approximately 80% of our business is now within residential and commercial roofing. These are very attractive markets as roofing is mainly repair and replacement, with the majority of that spend being non-discretionary.

We restored financial flexibility through a combination of debt paydown from the proceeds of the divestiture and a series of refinancing transactions. The results are a stronger balance sheet, lower cash interest and substantially reduced net debt at the end of the fiscal year. We now have ample ability to invest in value creating growth opportunities going forward.

ANNUAL REPORT 2021

We have transformed the business while actively living our values. Today, we are engaging every employee in what it means to work at Beacon, how we celebrate what makes us proud, as well as how we face challenges. We recognize the importance of our values for our employees, customers and stockholders.

Our four strategic initiatives made meaningful contributions and were particularly valuable during the pandemic. Our organic growth initiatives are showing results as we continue to invest resources in high potential markets. Our industry leading digital platform reached 13% of total sales by year-end and we have 50% more active users compared to the previous fiscal year end. By expanding and promoting our digital solutions, we are able to meet our customers' changing e-commerce needs and, at the same time, improve our returns. Private label product sales grew substantially during fiscal 2021 and offer a superior value for our customers while delivering higher margins.

The Beacon OTC® Network continued to benefit customers with improved service levels, delivery times and product availability. This initiative also provides efficiencies in staffing, fleet and inventory. Our OTC network consists of approximately 250 branches and 58 markets across the U.S. and Canada, and we opened our second hub in the important Houston market. We will continue to transition this model to markets containing a high level of branch density and remain confident it will drive shared success for our teams

and customers.

Our focus on improving branch performance is also producing significant results. Branches falling in the bottom quintile of our operating performance metrics are thoroughly reviewed and provided with the appropriate actions to improve the profitability of these locations. We saw markedly increased contributions from these branches over the past two fiscal years. We will continue to drive sales and operating improvements to bring these branches up to their potential.

As we look forward, we are confident in our team's ability to execute at a very high level. We are poised for continued growth, and I thank our more than 6,500 team members for their commitment and dedication to Beacon and our customers. I'm excited about our progress towards achieving our full potential and believe we are strategically and financially positioned for growth as we help our customers build more.

As always, we sincerely appreciate the support from the investment community as well as our valued customers, suppliers and employees.

Sincerely,

Julian G. Francis

President and CEO

WWW.BECN.COM

2021 HIGHLIGHTS

$6.64Billion

Net Sales

9.9%

Adjusted EBITDA Margin

$457Million

Operating Income

12.3%

Net Sales Growth

80%

Business in Residential and Commercial Roofing