Q1 2017 Investors Presentation Forward Looking Statements and - PDF document

Q1 2017 – Investors Presentation

Forward Looking Statements and Non-GAAP Measures This presentation contains information about management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward- looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's latest Form 10-K. In addition, the forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward- looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this presentation. This presentation contains references to certain financial measures that are not presented in accordance with generally accepted accounting principles (“GAAP"). The Company utilizes non-GAAP financial measures to analyze and report operating results that are unaffected by differences in capital structures, capital investment cycles, and varying ages of related assets. Although the Company believes these measures provide a useful representation of performance, non-GAAP financial measures should not be considered in isolation or as a substitute for any items calculated in accordance with GAAP. A reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure can be found in the Appendix to this presentation as well as Company’s latest Form 8-K, filed with the SEC on February 2, 2017. 2

Company Overview 3

Beacon Overview • A leader in many key metropolitan markets in the United States & across Canada • 373 branches across 47 U.S. states and 6 Canadian provinces* • Serving nearly 67,000 customers with a broad product offering up to 46,000 SKU’s • End market demand fueled by repair versus new construction (approx. 80%) • $4.5 Strong long-term historical performance Sales ($ in billions) $4.0 $3.5 • Historical sales CAGR = 16.6% $3.0 $2.5 $4.1 • Historical operating income CAGR = 16.2% $2.0 $1.5 $2.5 $1.0 • Historical operating margin averages 5.0% - 6.0% $2.3 $2.0 $1.8 $0.5 $1.6 $1.5 $0.7 $0.0 2004 2006 2008 2010 2012 2014 2015 2016 • Opened 75 new greenfield locations since the IPO Years • Successfully completed 40 acquisitions since our IPO in 2004 • On October 1, 2015 acquired 85-branch Roofing Supply Group (RSG) for $1.1 billion • Fiscal 2017 YTD acquisitions - BJ Supply Company, American Building & Roofing, Inc. and Eco Insulation Supply *As of 2/2/17 4

A 12-Year Success Story 5

Growth Strategy 6

Strong Platform For Growth And Acquisitions 5-10% “organic” average growth potential + + = Existing Market Existing Market New Branch New Branch Target Average Target Average Acquisitions Acquisitions Growth Growth Openings Openings Annual Growth Annual Growth • Acquisition opportunities • Historical sales CAGR: 16.6% • EBITDA impact = • Market plans by location are identified and Typically break-even accountable • Sales rep productivity in year one • Highly fragmented • Identify new prospects market • Over 1,500 players • New product offerings • Long history of successful integration • Margin and revenue improvement • Scalable platform 7

Greenfield Growth Sales Contribution Greenfield Financial Impact of Greenfields $700 ~$580mm of FY16 Sales • Disciplined approach to new branch openings in contiguous $600 markets Sales ($ in millions) $500 • Low initial investment … $0.6 million to $2.0 million $400 • Rapid breakeven … typically cash flow positive within one year $300 • Beacon Greenfields opened since the IPO account for $200 ~$580mm of FY16 sales $100 • New markets are continually being identified & evaluated $ ‐ Fiscal Year Average Sales per GF Since IPO Beacon & RSG Greenfield Openings* $8.0 CAGR = ~30% 34 Sales ($ in millions) $6.0 24 $4.0 12 11 $2.0 4 1 1 FY04-FY11 FY12 FY13 FY14 FY15 FY16 FY17 $ ‐ * Reflects “net” openings including branch closures for each noted timeframe Years in Operation 8

Acquisition Growth 9

Product Mix Growth Sales Sales Product Mix ($ in millions) CAGR $4,127 14.6% $604 11.6% $1,336 32.4% $2,515 16.1% $396 15.7% $1,734 13.7% $883 35.1% $237 $600 34.6% $2,187 53.0% 19.1% $653 49.2% 24.7% $1,236 $161 $897 51.7% 34.2% $223 $269 41.2% FY04 FY09 FY15 FY16 Residential Roofing Non-Residential Roofing Complementary Building Products • Up to 46,000 SKUs offered • Selected relationships with manufacturers to achieve substantial volume discounts • Historically, re-roofing makes up approximately 79% and 81% of residential and non-residential demand, respectively.* 10 Source: Freedonia June 2015

Significant Sales Growth Net Sales ($ in millions) $4,500 $4,127 $4,200 $3,900 FY04 to FY16 = 16.6% CAGR $3,600 $3,300 $3,000 $2,700 $2,515 $2,327 $2,400 $2,241 $2,044 $2,100 $1,817 $1,784 $1,734 $1,800 $1,646 $1,610 $1,501 $1,500 $1,200 $851 $900 $653 $600 $300 $0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 11

Industry Drivers 12

Large And Attractive Market Approximately $26 billion industry U.S. Roofing Materials Market Non-Residential Residential 42% 58% Source: The Freedonia Group and Management estimates 13

Aging Housing Market Leads To Re-Roof Demand Year of construction of housing stock • Traditionally, over 78% of expenditures in the 2014 (133.3 million units) roofing market are for re-roofing projects, with the balance being for new construction. • In 2014, re-roofing made up approximately 1970’s 80% and 83% of residential and non- 18.8% residential demand, respectively. 1960’s 1980’s 11.5% 12.1% • The median age of the housing stock as of 2014 is over 40 years old. 1990’s • Re-roofing demand provides stability and the 11.6% potential for growth even during periods of Pre - 1960 declining building construction expenditures. 30.8% 2000 or later 15.2% Source: The Freedonia Group – June 2015 14

Re-Roofing Concentration Drives Stable Growth Construction Growth YoY % 30.0% 20.0% 10.0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -10.0% -20.0% -30.0% -40.0% -50.0% New Residential New Non-Residential Total Roofing • Residential new construction activity has been volatile • Commercial new construction is also volatile and closely follows economic cycles • Demand for roofing, due to the large installed base of aging structures, remains very stable and consistent despite the construction cycles Source: The Freedonia Group 15

Drivers of Re-Roofing 94% of U.S. re-roofing demand is non-discretionary and insulated from broader economic conditions 3% 3% 2% Leaks Old 40% 27% Weather Damage Deteriorating Upgrade Appearance Other 25% Source: 3M, National Association of Home Builders 16

Strategically Located To Serve Severe Weather Markets Billion Dollar Weather Disasters 1980 - 2015 Source: National Climatic Data Center Number of Events 1 - 15 16 - 29 30 - 39 40 - 49 50+ 17

Scale Advantages in a Fragmented Market Roofing Industry Overview Estimated Roofing Industry Market Share (2) • • Roofing is approximately a $26 billion industry (1) Roofing is approximately a $26 billion industry (1) Rest of Top 4 (3) 16% • • Beacon is the second largest roofing distributor Beacon is the second largest roofing distributor Company 1: 25% Company 2: 6% in North America in North America Company 3: 6% Others • • Beacon sales are more than $1 billion greater Beacon sales are more than $1 billion greater Other Roofing Suppliers: 48% than its next largest competitor than its next largest competitor Multi-Regional Roofing Players Top 5 Distributors Number of Roofing Distributors 75 Account for 1,500 Are in more than ~52% Total one region of industry sales Sources: The Freedonia Group, Pro Sales Magazine. (1) Source: The Freedonia Group and Management estimates 18 (2) Top 4 share estimate based on sales figures in Pro Sales Magazine, May 2015. (3) Figures may not sum due to rounding.